Blockchain Types: Public vs Permissioned Blockchains

In this post, Krisha explains the 2 Types of Blockchains - Public vs Permissioned Blockchains

We have witnessed the term “blockchain” evolve from something dark and unknown, to the hottest topic on the block. While many are drawn to the ‘Investment’ opportunities that the technology presents, others have latched onto the efficiencies that blockchain promises.

This disparity in interests has prompted questions on the multipletypes of blockchains available. Questions like, 'Which type of blockchain would best serve an individual's or company’s interests?"

However, when broken down simply, you’ll realize that there’s only one pivotal difference between each of these blockchain types:

The need for Permissionto participate in each of them.

In essence, every blockchain can be categorized under one of these 2 types:​Public (Permissionless) Blockchain​Permissioned Blockchain

Blockchain Consensus Rules All

A Blockchain's Consensus Mechanismallows participants to come to agreement on a truth that the network was intended to acertain.

The context of “permission” in blockchain lies within this Consensus mechanism.

Depending on the type of blockchain, an individual or entity may or may not require permission to participate in the consensus process.

In Public (Open) Blockchains,no permission is required whatsoever. Anyone can participate in the consensus process.

In Permissioned Blockchains, an individual will require permission to participate in the consensus process.

A Little Perspective- The blockchain consensus mechanism is akin to a jury in a case trial. A jury reaches consensus on the final verdict - they agree on the truth. Consensus is as crucial a function to blockchain, as it is to a case trial.

​​​​Public vs Permissioned Blockchains

In Public Blockchains, anyone can participate in the consensus process. The network is open for Public use in every capacity. Public blockchains are “permissionless blockchains”, and are considered as “fully decentralized”

An individual/entity does notrequire permission to …

Send/ receive transactions on the network

Read the transactions on the chain

Secure the integrity of the network by validating transactions and participating in the consensus process (i.e - being a node).

In Permissioned Blockchains however, the consensus process is either controlled by a group ofknown entities, or a single entity.

The network requires permission for one or all of the following:​​

Send/ receive transactions on the network - Write permissions

Read the transactions/events on the chain - Read permissions

A Permissioned Blockchain controlled by a single entity can be deemed a 'Private Blockchain' - A subset of permissioned blockchains

Permissioned vs Private Blockchain

Note that The lower the number of entities participating in the consensus process, the more centralized the network.

Permissioned Blockchains? For What?

At this point you’re probably wondering:“Don’t permissioned blockchains defeat the idea of a ‘decentralized’ network’?”

Simple Answer:​Yes, it does. But permissioned blockchains are more than willing to make that trade-off. ​Confused??Think back to theblockchain trilemma

The blockchain trilemma states that one sacrificewill have to be made among the three: Security, Scalability and Decentralization

Permissioned blockchains choose to sacrifice Decentralization for Security and Scalability

The sacrifice of decentralization in favour for security and scalability is particularly attractive to large entities. It enables them to leverage blockchain’s cryptographic security measures, and still ensure scalability to meet the needs of a growing customer base.

As of now, permissioned blockchains are the only viable solution for large entities looking to implement blockchain technology. This may change in the future if public blockchains break the trilemma, and learn to scale.

Wrapping Up

The difference between public and permissioned blockchains ultimately boils down to, "who gets to participate in the consensus process ? "- Every network participant? Few known, trusted entities? Or one single entity?

Between Scalability, Security and Decentralization – a tradeoff needs to made. As things stand, Public blockchains have sacrificed scalability, while Permissioned blockchainssacrificed decentralization.

Both, Public and Permissioned Blockchains have their pros and cons. Depending on who you ask, and where their interests lie, one will always be more beneficial than the other.